Omololu Ogunmade in Abuja
The presidency Thursday in Abuja castigated the Peoples Democratic Party (PDP) presidential candidate, Alhaji Atiku Abubakar, over his scathing criticism of President Muhammadu Buhari’s 2019 budget, saying he lacked the capacity to evolve any superior argument.
Special Adviser to the President on Media and Publicity, Mr. Femi Adesina, in a lengthy statement, itemised various criticisms of the budget as reeled out by Atiku, picking holes in each of them and proceeding to educate him on each of such criticisms.
According to Adesina, Atiku was quick to identify perceived flaws in the budget while failing to come up with a single idea on how each of such flaws could be addressed.
He also pointed out that the former vice president’s perceived baseless criticism of the budget underscored his level of ignorance on the working knowledge of the economy.
Beginning from Atiku’s description of the underlying assumptions of the budget as “generous, wild and untenable” with further claims that the economy was yet to recover from the recession of 2016/2017 fiscal years, Adesina took on Atiku, saying the PDP presidential candidate lacked understanding of recession.
He said: “Atiku describes the underlying assumptions of the budget as generous, wild and untenable but does not propose alternative assumptions that would have been more appropriate. He argues that the economy is yet to recover from the 2016/2017 recession.
“Unfortunately, he cannot create his own definition of an economic recession, which is a technical term with a universally applicable meaning. When an economy experiences two consecutive quarters of negative Gross Domestic Product (GDP) growth, it is said to be in recession and whenever it returns to positive GDP growth of whatever rate, it is said to have exited recession. It is doubtful if he understands the simple meaning of recession.
“Atiku attributes the sustained accretion to foreign reserves to ‘increases in international prices of Brent crude and foreign borrowing’. But he conveniently forgets that under the immediate past federal administration oil prices were at an all-time high with substantial growth in foreign borrowings, and yet foreign reserves nose-dived from a peak of $62 billion to as low as $24 billion.
“His repeated reference to the price of Brent crude throughout his statement may be indicative of his lack of knowledge that Nigeria’s Bonny Light crude trades at a premium of at least $2 per barrel over the price of Brent; just as his reference to Nigeria’s OPEC quota may also suggest that he does not know that condensates do not count in measuring compliance with the quota.”
Furthermore, Adesina examined Atiku’s criticism of the provision of N305 billion for fuel subsidy in the budget, insinuating that the criticism was only political as according to him, the former vice president failed to state in clear terms how he hoped to address the issue of under-recovery.
According to him, even though Atiku Campaign Organisation had promised to reduce the pump price of fuel to N87 if elected, Nigerians would await how he hopes to fulfil such promise with apparent impossibility to make the refineries perform optimally.
He wondered how Atiku would reduce burdens on ordinary Nigerians such as ‘keke,’ ‘danfo’ ‘okada’ riders and small business entrepreneurs whom he said depended on fuel to conduct their economic activities without subsidising the cost of fuel and yet promised to reduce pump price of fuel cost to N87.
Also reacting to the criticism that the budget size was very small, Adesina believed that such claim was misplaced , as Atiku failed to offer what he described as “any implementable options for improving domestic resource mobilisation, which is the only sustainable means to achieving larger budgets,” adding that: “It does seem that he does not understand or is just feigning ignorance about the critical role of revenue in budget preparation.”
He also rejected Atiku’s claim that the budget did not reflect “current realities,” saying what Atiku claimed to be current realities were issues already raised by Buhari in his budget speech.
“For instance, the president recognised that the revenue performance of the federal government up till September 2018 has been less than spectacular. Leaving aside for a moment the fact that there has been a remarkable increase in Federal Account receipts in the last three months, a look at the budget speech will show that the president specified a number of actions to tackle revenue weakness, including strengthening ongoing efforts at tax collection, liquidation of recovered assets, immediate recovery of past due oil royalties charges and deployment of the National Trade Window to improve customs collections,” he said.
Furthermore, Adesina said “The most laughable” of Atiku’s criticism is the claim that “there is little evidence to show that increased investment in agriculture has yielded positive results,” arguing that “even the worst adversary of the Buhari administration would acknowledge that significant progress has been made in the agriculture sector.’”
He alleged that in his desperate attempt to rubbish the budget, Atiku combined foreign direct investment with capital inflows, describing it as wrong as “capital inflows covers foreign direct investment, foreign portfolio investments, international borrowing and short-term deposits in money market instruments.”
He added: “He complains about movements in foreign portfolio investment which are often volatile and reflect monetary policy normalisation in the United States, meanwhile he is silent on the positive trade surplus mentioned in the budget speech which truly reflects living within our means as a country.
“Atiku also calculates the budget deficit as a percentage of current revenue rather than as a ratio of gross domestic product which is the preferred standard for inter-temporal measures of the deficit. Using this more appropriate measure the national fiscal deficit is 1.3 percent of GDP which is well below the 3 percent specified in the Fiscal Responsibility Act and well within the best global norms. So much for those who claim they have the magic wand to grow the economy…
“To further show Atiku’s lack of knowledge about basic issues in the petroleum market, he contradicts himself in his quest to make a non-existent point. He complains about the benchmark price of $60 per barrel used for crude oil exports in the budget and tries hard to show understanding of the dynamics of the global oil market by referring to US shale oil production and pressures on the Saudi regime. Yet Atiku expects that OPEC quotas will come into force, in which case the price of crude oil may rise in international markets.
“What is obvious is the fact that low oil prices impact negatively on shale oil production. For instance, recent reports from a Permian producer show that with West Texas Intermediate at near $45 per barrel, they have already cut back on rig count and use of completion crews. There is more over the demand side which remains extremely strong in the United States, while large economies like China and India will continue to grow at over 6 per cent and 7 per cent respectively in 2019, which will also impact on crude oil prices.
“Finally, Atiku moans about the capital budget without acknowledging the historically high capital expenditure over the past two budget cycles continuing into the current 2018 budget cycle. Apart from the fact that the federal government has kept to its promise to keep capital expenditure at 30 per cent of the budget, the PDP Presidential candidate is quiet about his plans to raise capital expenditure and reduce recurrent spending.
“The reality is that it can only be done by retrenching public sector workers and by not increasing the minimum wage to which this government is fully committed.
“It is therefore obvious that Atiku’s statement on the budget was a poor attempt at playing to the gallery. Without a doubt, the country faces significant fiscal challenges. “The administration of President Buhari understands these challenges, as well as workable solutions thereto. The implementation of some of the solutions however needs to be paced and well-timed to avoid dislocating the growth trajectory of the economy. Atiku’s criticism of the 2019 budget proposal can best be described as high on populist rhetoric but low on any real solutions to the identified challenges.”